What Is a Kansas Money Transmitter Bond?
If you’re planning to launch a Kansas money transmitting business, you will have to obtain a state license that allows you to operate legally. You will need to provide a money transmitter bond as a part of the licensing criteria.
Why is the bond requirement needed? The goal of the bond is to protect the state and your customers. It is an extra guarantee for your legal compliance.
Similarly to the rest of surety bonds, your money transmitter bond works like a contract between three entities. The principal is your money transmitting company. The obligee is the Office of the State Bank Commissioner of Kansas. The surety is the third party that provides the bonding.
Questions about Money Transmitter Bonds in Kansas
In which cases do I have to get this bond?
A Kansas money transmitter license is a must for all entities that want to conduct money transmitting in the state.
The licensing body is the Office of the State Bank Commissioner of Kansas, but the actual procedure is conducted via the Nationwide Multistate Licensing System and Registry (NMLS).
You need to provide the bond in the official form which we have on file. The bond ensures you will follow the Kansas Money Transmitter Act.
How is the Kansas money transmitter bond cost set?
The bond amount that you have to provide is the greater amount between $200,000 and your total transaction volume in the state multiplied by 0.25%. The maximum bond amount that the Commissioner may require is $1 million.
The amount you post is not the same as the bond premium that you have to pay. Your surety bond cost is only a small percentage of the required amount, which is usually between 1% and 5% for applicants with stable finances.
For money transmitter bonds, the most important factor that a surety considers is the business owner’s personal credit score. Since the bond amount is large, you are also likely to be asked to provide your audited business financials.
Additional documents you may need to show include your personal financial statement and cash verification. The currency type you’re working with may also affect the bond cost.
What if my finances are problematic?
It is more difficult to get a money transmitter bond in Kansas if your finances are not in good shape. While it may be possible to get bonded, the decision would depend on the strength of your finances. You would certainly need to provide your audited business financials.
The surety underwriter will have to judge whether it is possible to extend bond coverage as large as $1 million on the basis of your personal and business finances.
How do I apply for a Kansas money transmitter bond?
Need more information about the way bonding works? You can review our in-depth How to Get Bonded page for further details.
If you need help with your application or have queries, our bonding experts are here to help. You can call us at (877) 514-5146 to get in touch with us.
How are bond claims handled?
If you transgress from your obligations under Kansas law, you may end up with a bond claim. The reason is that your bond protects your customers rather than your business. Thus, if you fail to follow the respective rules and regulations, you may have to cover damages for the harmed parties.
Claimants can seek a reimbursement up to the penal sum of your bond, which is considerable in this case. The surety that bonded you may cover the costs initially. However, you are fully liable for all payments, which you have to repay soon after.
Thus, proven bond claims are a serious issue for your business, so it is best to stay away from situations that can give rise to them.